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US companies sued for podcasting

Ben KnightUpdated
Wed 5 Jun 2013, 8:16 PM AEST

A US company claims it invented podcasting - and that it has the patent to prove it. It's now suing some of the biggest broadcasters in the US for infringing its intellectual property. It's far from a frivolous claim. The same company has already extracted millions from some of the biggest tech names in the world, even though it doesn't actually make any products of its own.

Transcript

ASHLEY HALL: Podcasting is one of those technologies you might assume grew organically as people explored the possibilities of the internet. You might well be listening to this program on one.

But a US company claims it invented podcasting and that it has the patent to prove it. It's now suing some of the biggest broadcasters in the US for infringing its intellectual property.

It's far from a frivolous claim. The same company has already extracted millions from some of the biggest tech names in the world, even though it doesn't actually make any products on its own.

Critics say it's a patent troll - part of a massive legal problem US tech companies are encountering that's costing them billions of dollars every year. The company says it's just protecting its investment.

Ben Knight reports from Washington.

BEN KNIGHT: Barack Obama himself gave a pretty good description of patent trolling just a few months back.

BARACK OBAMA: They don't actually produce anything themselves, they're just trying to essentially leverage and hijack somebody else's idea and see if they can extort some money out of them.

BEN KNIGHT: And it works. One Boston University study found that in 2011 alone, patent trolls cost US businesses $29 billion. The number of cases is ballooning each year.

The patents themselves can be vague, broadly worded, and in some cases, even describe things that have already been invented. So why then do companies pay up?

DANIEL NAZER: The choice becomes a business decision. Pay $2 million to defend or $100,000 in settlement.

BEN KNIGHT: Daniel Nazer is a lawyer with Electronic Frontiers, and he's currently defending a case being brought by a company called Personal Audio - a company he says is simply another patent troll.

It doesn't make anything, but does own a group of patents that describe what we now call podcasting, based on a description it filed with the US Patent Office back in 1996.

Jim Logan from Personal Audio says his company is definitely not a patent troll.

JIM LOGAN: We are the inventors. We came up with the idea. We put sweat equity and hard earned dollars behind the effort to come up with personalised audio back in the '90s. It didn't pan out and we're just trying to basically recoup our investment on the other end by getting some value from patents.

BEN KNIGHT: They're certainly doing that. Personal Audio won $8 million dollars from Apple last year, for breaching its patent on playlists for personal media players.

Personal Audio also has licensing agreements with massive companies like Samsung, Motorola, Sony, and LG. Those agreements came about when Personal Audio sued them for breaching its patent.

Now, the company is going after the American networks CBS and NBC, as well as others, for infringing its patent on podcasting. This is a patent that the company was awarded last year. It's also written to dozens of smaller podcasters, telling them that they, too, are in breach of the patent

Jim Logan won't say exactly how many podcasters Personal Audio has written to, or how much they're asking them to pay in licensing fees.

JIM LOGAN: We haven't really publicised our licensing model yet, but we probably will be in the next few weeks.

BEN KNIGHT: So you'll be asking people who are podcasting for licence fees?

JIM LOGAN: Yes, right.

BEN KNIGHT: Everybody who's podcasting?

JIM LOGAN: Well, not everybody, but the folks that we will be talking to...

BEN KNIGHT: Does that include people who are doing it from home? Amateurs? People who are doing it for the love of it?

JIM LOGAN: Yeah. I mean, those people will probably never hear from us, because it's just impractical to reach that broad an audience.

MARC MARON: It's scary shit.

BEN KNIGHT: Comedian Marc Maron has one of the most popular podcasts in the country. But, he doesn't find this idea funny at all.

MARC MARON: Especially the people who are working out of their garage, or you, who are trying to start your podcast. All of a sudden, this company, this troll company, is going to shake you down to extort money from you.

BEN KNIGHT: David Nazer says the defence will be simple..DAVID NAZER: They didn't really invent podcasting. The challenges for podcasting in 1996 were hardware challenges and challenges about bandwidth, distributing large files through the primitive internet.

And, their patent addresses none of those issues. So, when they say they failed to actually produce a commercial product, that's because they didn't do any of the hard work that led to the podcasting that we know today.

BEN KNIGHT: There are currently five bills before the US Congress to crack down on the number of patent lawsuits being brought in the US. And on Tuesday, Barack Obama announced his own series of executive orders.

The most effective measure is likely to be a change in the law which will allow defendants to claim costs if they win. Meaning it's not a guaranteed loss if they decide to defend it. But the entire patent system in the US is widely regarded as being broken: a tax on innovation in a country that thrives on it.